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THE CHICKENSHIT CLUBWhy the Justice Department Fails to Prosecute ExecutivesJesse Eisinger Simon & Schuster377 pages; $28 On April 27, 2010, Senator Carl Levin summoned the Goldman Sachs CEO Lloyd Blankfein and his lieutenants before the Permanent Subcommittee on Investigations to answer allegations that the bank had misled investors prior to the 2008 financial crisis. Upon completing its investigation, Levin’s committee recommended that the Department of Justice open a criminal investigation into both Goldman’s business practices and the denials made by its executives before Congress. Blankfein hired Reid Weingarten, a famous white-collar defence attorney who had once said of his work, “I feel like I’m in the French Revolution, defending the nobility against the howling mob.” Weingarten was a friend of Attorney General Eric Holder; his children went to Georgetown Day School with the children of Lanny Breuer, head of the criminal division of the DOJ Breuer, who had spent much of the previous decade at the elite Washington law firm Covington & Burling, assigned the case to Dan Suleiman, a former Covington associate. Weingarten pestered Breuer, saying, “Close this …case, will ya?” In 2012, the Justice Department announced that it would take no further action against Goldman or Blankfein. That’s how the game is played. (A year later, Breuer and Suleiman both returned to Covington.) Why was virtually no one prosecuted for causing the 2008 financial crisis, which devastated the global economy and cost the United States almost nine million jobs? Some people think the fix is in: Bankers control the government, so they can get away with anything. Others claim that the banks did nothing wrong to begin with — or, alternatively, that there was insufficient evidence to prove beyond a reasonable doubt that anyone in particular committed a crime. In this new book, the ProPublica reporter Jesse Eisinger tells a different story: Since the turn of the century, changes in the political landscape, the defence bar, the courts and most important the Justice Department have undermined both the ability and the resolve of America’s top prosecutors to go after corporations or their executives. ’Twas not always so. After Enron collapsed in 2001, federal prosecutors convicted the company’s accounting firm, Arthur Andersen, which surrendered its accounting license, as well as its three top executives. The former Enron CEO Jeffrey Skilling is currently serving a 14-year prison sentence. By contrast, Goldman is still the world’s pre-eminent investment bank, and Lloyd Blankfein is still its CEO. Perhaps it was too hard to prove that the bank’s actions — which included betting against structured financial products while it was selling them to clients — violated the letter of the criminal law. Eisinger does not address that question head-on, which may disappoint some readers. His point, however, is that the Justice Department’s prosecutors didn’t try very hard — and the few who did were reined in by their politically appointed bosses. This solicitous attitude toward corporations was part of a larger cultural shift in the business and legal world.

Defending executives became an increasingly lucrative practice for elite law firms, which recruited star prosecutors from the Justice Department. Corporations accused of misconduct lawyered up, offering extensive internal investigations but erecting imposing defenses around individual executives. Banks cultivated plausible deniability, their internal oversight systems too feeble to pin responsibility on any individual; Goldman executives used the abbreviation LDL — “let’s discuss live” — to hide their traces. Prosecutors and regulators could either negotiate a modest settlement and declare victory or take on the daunting task of bringing actual people to trial — with the significant risk of losing. “A symbiotic relationship developed between Big Law and the Department of Justice,” Eisinger writes.